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New drugs target patient as well as disease - but who will pay?

By Brady Dennis

The Washington Post

Updated:
06/02/2014 06:18:15 AM EDT

WASHINGTON — When the Food and Drug Administration recently approved a promising new lung cancer drug named Zykadia four months ahead of schedule, it heralded the medication as a "breakthrough" therapy.

The drug isn't meant for everyone with the devastating disease, which kills an estimated 160,000 Americans each year. Or even for the majority of patients with its most common form, non-small-cell lung cancer.

Rather, Zykadia is designed for a sliver of patients — about 5 percent — who have advanced non-small-cell lung cancer and have a specific gene mutation that causes tumors to become resistant to existing treatment. For them, and only them, the drug has the proven potential to shrink tumors and extend lives.

The FDA's speedy approval of Zykadia offered the latest evidence that the age of "personalized medicine," while long predicted, is increasingly becoming reality. For reasons scientific and economic, one-size-fits-all blockbuster drugs are giving way to treatments tailored to individuals' genetic makeups and aimed at narrow subsets of broader diseases.

"It's a new world," said Wendy Selig, president of the Melanoma Research Alliance, the largest private funder of research on the disease, which this year is expected to kill nearly 10,000 Americans. "We're segmenting what we thought of as large diseases into smaller populations of patients that are defined by genetic distinctions. . . . The goal is to match the right therapy to the right patient, and to do it with minimal collateral damage."

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Since 2011, the FDA has approved numerous new treatments for melanoma patients with certain types of genetic mutations. The agency also has given the green light to many drugs for other specific cancers, and to a revolutionary treatment for a small proportion of people with cystic fibrosis. Companion diagnostic tests often help identify which patients might benefit from the targeted treatments.

Pharmaceutical companies have ramped up investment in personalized medicine in recent years, and the number of targeted therapies in the development pipeline reflects that evolution. For example, the FDA said about 80 percent of the nearly 50 drugs it has designated as potential "breakthrough" drugs involve targeted therapies.

For patients who benefit, the advantages are striking: Earlier and better diagnoses, more effective treatments and even possible cures, or at least more time, for people who previously had little hope.

But the trend toward targeted medicine also is forcing hard questions on regulators, drug makers, insurers and patients alike: Who should pay for the growing number of specialized drugs, which can cost hundreds of thousands of dollars a year? How does society ensure that everyone who might benefit — rich or poor — can receive treatment? What about patients whose specific conditions or mutations have not attracted investment dollars or the attention of researchers, leaving them to watch and hope from the sidelines?

"We're heading for some kind of reckoning," said Barry Werth, an author and journalist who has spent decades writing about the pharmaceutical industry. "I don't know that anybody has thought through how that's going to play out."

Many of the current breakthroughs stem from successful mapping of the human genome, completed in 2003. Armed with an intimate understanding of the human genetic code, scientists have spent the past decade deciphering the underlying causes of certain diseases.

As a result, applications for drugs aimed at specific populations of patients — whether for rare diseases or subsets of more common diseases — keep arriving at the FDA. One factor: a lack of blockbuster drugs that once sustained big pharmaceutical companies. Another reason: financial incentives such as accelerated approval and longer exclusivity for drugs deemed especially novel and necessary.

"As we unravel these diseases and we have a better understanding of them and the underlying mechanisms that cause them, I think we're just going to see more and more of this," said Anne Pariser, associate director for rare diseases at the FDA's Center for Drug Evaluation and Research.

And likely more sky-high price tags.

For now, Werth said, the system works for everyone: Federal regulators can tout their role in getting lifesaving drugs to market. Makers of specialized drugs reap profits. Patients receive cutting-edge treatments. Private insurers and Medicare generally cover the high drug costs, which account for only a fraction of overall health-care spending.

But, Werth said, what happens when targeted drugs become the rule rather than the exception? Will insurers refuse to cover some of them? Will the government ponder rationing them? Will only the wealthy be able to afford the best and newest treatments?

He pointed to the much-heralded cystic fibrosis drug Kalydeco, which was approved in the United States and Europe in 2012. About 4 percent of the estimated 30,000 U.S. cystic fibrosis patients have the genetic mutation allowing them to benefit from the drug. Given that relatively small number, insurers have largely covered the drug, which runs about $300,000 a year in the United States. Its manufacturer, Vertex, offers it free to patients without insurance and assists many others with out-of-pocket costs.

But in some cases, the willingness of insurers and governments to pay for such pricey drugs is beginning to fray.

Insurers are publicly rebelling against the price of Sovaldi, a groundbreaking new treatment for hepatitis C that costs $1,000 per pill — or $84,000 for a 12-week treatment. Unlike drugs targeted to small groups of patients, Sovaldi could treat the estimated 3 million Americans infected with hepatitis C, a potential cost that has sent shudders through the insurance industry.

The worry is that Sovaldi is the poster child for a "tsunami of expensive medicines" that collectively threatens to bankrupt the health-care system, said John Rother, president of the National Coalition on Health Care, which represents insurers, employers, consumer and religious groups, health-care providers and some drug manufacturers.

"We've been able to absorb it so far because there are very few of them and because they are consumed by very small numbers of people," Rother said of specialty drugs. "[But] if they're all priced at the same level Sovaldi is, we really won't be able to absorb it in the current system. It's not sustainable."

Even the head of the cancer division at the FDA, which is not allowed to consider cost in deciding whether new drugs are safe and effective, has acknowledged the angst surrounding soaring price tags for new cancer treatments.

"Obviously, we can't just continue going on with escalating prices of drugs," Richard Pazdur told Reuters over the weekend at the American Society of Oncology meeting in Chicago. "That's not a regulatory decision or anything profound from the FDA. It's just the reality of the situation."

Edward Abrahams, president of the Personalized Medicine Coalition, an advocacy organization that includes drug-makers, medical providers and patient and research groups, said the development of targeted drugs simply does not come cheap. Getting a promising drug to market can take a decade or more and billions of dollars, he said, and unless companies can recoup those costs, research will wither.

"As a society, we're schizophrenic about this," Abrahams said, adding that everyone wants to cure cancer and other diseases. "But at the other end, you have to be willing to pay for these products. . . . When you develop a drug for a segmented population, the cost of that drug is likely to be higher than if it worked for everybody."

Abrahams said targeted treatments also can save money by cutting down on unnecessary drugs and procedures, a sentiment echoed recently by John Castellani, head of the Pharmaceutical Research and Manufacturers of America, or PhRMA, who called it "penny wise and pound foolish" to focus solely on the price of new medicines. Rather, Castellani blamed "an outdated insurance model that is forcing patients to pay an ever-growing share of their prescription drug costs."

More than 2,000 miles from the drug debates in Washington, in Coeur d'Alene, Idaho, Kalydeco has transformed life for 6-year-old Brady Schroeder, who has cystic fibrosis. His mother, Rebecca Schroeder, said his lung function has vastly improved. Minor infections no longer send him to the hospital, and he now requires only about 15 minutes of breathing treatments a day to clear his lungs, compared with two hours or more in the past.

Schroeder also frets about the high cost of Kalydeco and wonders what her family — and others — would do if they lost their health insurance or the assistance they receive from Vertex. She is convinced that the drug might give her son decades he otherwise would not have.

"I would do anything to get Kalydeco — pay any price," said Schroeder, a chemist. "Watching your child struggle to breathe and slowly suffocate on their own mucous is an indescribable type of torture. Kalydeco took that away. What is that worth?"

Schroeder was so grateful for the drug that she felt compelled to get a tattoo on her left foot — of the molecular structure of Kalydeco. Above it, she added three words: